By Sam Boughedda
JD.com (NASDAQ:JD) was cut to Neutral from Buy at UBS by analysts on Friday, who also lowered the firm's price target on the stock to $43 from $60 per share.
They told investors that the company's subsidy campaign cannot offset competitive headwinds on revenues, and it lacks exposure to fast-growing segments of e-commerce.
Analysts explained that JD.com management is offering more merchant incentives and user subsidies for the 6/18 shopping festival (and JD's 20th anniversary).
"We believe JD could undergo a longer adjustment period, in order to improve its product selection and user experience for value-oriented shoppers," the analysts wrote. "This should help JD long term to compete with Pinduoduo, Alibaba, and Douyin, but in the next few quarters, JD's growth could decelerate more than we expected."
"JD's competitors could benefit more from the near-term consumption recovery, which drives growth in discretionary categories more than electronics and appliances (though JD is still gaining market share in the latter categories from offline)," analysts added. "We now expect 3.7% revenue and 10.3% earnings growth in 2023 vs. 10.0% and 16.7% in our previous estimates. Our US$43 PT for JD implies a P/E valuation between BABA and PDD."